Collective Brands Inc. is expanding its Payless ShoeSource retail chain into Russia.  Payless plans to open stores beginning in 2010 in Russia with franchise partner M.H. Alshaya. The agreement reportedly calls for between 95 and 150 stores to be built within five years. Alshaya will own and operate the stores, but Collective Brands has the option to buy into them.

Collective first began franchising its stores this year in the United Arab Emirates, Saudi Arabia and Kuwait.

Alshaya is currently Payless' franchisee partner in the Middle East region with whom the retailer has successfully opened the market with stores in the United Arab Emirates, Saudi Arabia, Kuwait with stores also planned in other countries in the region including Oman, Bahrain, Qatar, Egypt, Jordan and Lebanon.


Alshaya's Russian subsidiary has been operating as a retail franchisee in Russia for nearly a decade with more than 100 stores representing international brands.


The two companies said they expect to start opening new Payless stores in 2010 and that Russia — the largest land-mass country in the world with 140 million people with rising household incomes and families attracted to affordable fashion — appears to be a strong fit for the Payless offering and brand promise. About five stores will open in Russia late next year; Payless and Alshaya said that they expect a minimum of 90 stores in the country in about five years and at least 300 stores in the long term. This is a multi-year transaction; additional terms were not disclosed.


“The franchise model is proving to be the most efficient way to reach more international markets with the Payless brand and all it has to offer — great fashion, well-recognized brands and quality all at a great price,” said Matthew Rubel, chief executive officer and chairman of Collective Brands, Inc. “Payless brings the know how in footwear specialty retailing, and Alshaya brings its strong infrastructure and local experience in Russia. Like many people across the globe, Russian people love to shop and have a strong appetite for fashion and footwear and accessories. Together we are truly excited to bring the Payless brand to Russia and to affordably serve the footwear and accessory needs of families in the country.”

M.H. Alshaya Co. is the retail business of the Alshaya Group, which has interests in hotels, real estate and investments that was founded in Kuwait in 1890.